Chief Justice Burger: We will hear arguments next in Nevada against United States, et al.--

Mr. Prettyman, I think you may proceed whenever you are ready.

Mr. Prettyman: Mr. Chief Justice, and may it please the Court, I represent the state of Nevada, and I will be followed by Mr. Girard, representing the Truckee-Carson Irrigation District, or TCID.

This is a preclusion case.

The basic issue is to what extent the United States and the Paiute Tribe of Indians are barred by res judicata or collateral estoppel from seeking more water from the Truckee River in Nevada for the Indians' reservation.

We say that they are completely barred by virtue of the final decree that was rendered by the Federal District Court in Nevada in the so-called Orr Ditch case some 40 years ago.

Now, Orr Ditch was no piecemeal, interlocutory, or open-ended proceeding.

As both of the courts below found, this was a comprehensive, all-inclusive, quiet title water adjudication.

It was begun in 1913, with the United States appearing on behalf of both the tribe, which had been set aside... rather, the reservation, which had been set aside in 1859, and also the Newlands Project, which is a reclamation project authorized by Congress in 1902.

Now, Winters had been decided five years before this Orr Ditch case was begun, in 1908, so that for the reservation, the United States was seeking water for the primary purpose of the reservation which it deemed to be to convert the Indians from their nomadic habits into husbandry and agriculture, and therefore to give them water for irrigation.

For Newlands, the United States sought enough water to irrigate the project.

The case proceeded for some 13 years, until a temporary restraining order was entered in 1926 by the court after a Special Master had heard evidence, and the TRO acted as a kind of a trial balloon.

Would the TRO work?

Was it feasible?

And this test period lasted for 18 years, until finally, in 1944, a final decree was entered which established the quantification for every claimant to this river.

It applied then and for the future.

It prohibited every claimant from ever again seeking water of the Truckee.

It contained no reopening provisions.

As for the Indians, the Court of Appeals said the government placed in issue the reservation cause of action.

And now what do we find?

Twenty-nine years later, the government brought this action seeking additional water on behalf of the tribe.

The Ninth Circuit made two holdings.

First of all, it held that res judicata prevented this suit insofar as the Orr Ditch defendants were concerned.

In other words, even if the United States should not have represented both the reservation and the project, which the Ninth Circuit did not decide, the Orr Ditch defendants were not aware of any impropriety, and consequently res judicata applied.

We believe that that ruling is clearly correct.

Mr. Kneedler: Who were the Orr Ditch defendants?

Mr. Prettyman: The Orr Ditch defendants were some 744 claimants to the Truckee River, Your Honor.

Mr. Kneedler: Wholly... who had pre-existing rights?

Mr. Prettyman: That's correct, of varying priorities.

Mr. Kneedler: Wholly aside from those who would get water from the Newlands?

Mr. Prettyman: I'm sorry.

Mr. Kneedler: Wholly aside from those who would get water from the Newlands.

Mr. Prettyman: Yes, these claimants, Your Honor, I think eight of them actually proceeded the reservation claims, and most of them came between then and 1902, and some came after 1902.

Mr. Kneedler: Yes.

All right.

Mr. Prettyman: Right.

The court also made a second ruling, however, and this was two to one, with Judge Schroeder dissenting, namely, that the United States could take water for the tribe from the Newlands Project farmers because in Orr Ditch, the Ninth Circuit thought that there was no adversity under the pleadings insofar as the Newlands farmers were concerned.

Now, the first point I would like to make, and incidentally, we obviously regard that ruling as an error.

We think res judicata applies across the board.

The first point is that there was nothing improper about the government representation in Orr Ditch.

In these types of case, as this Court is well aware, the government often has to represent diverse interests.

It may be reservations.

It may be reclamation projects, national forests, naval bases, and so forth.

And this Court said as much last month in Arizona versus California, when it approved Heckman.

Heckman, incidentally, had been decided only one year before Orr Ditch began.

There was certainly nothing improper perceived at the time of Orr Ditch by the government's representation.

It thought that it was proceeding quite properly, and very actively, on behalf of both the project and on behalf of the reservation.

Moreover, the government's good faith representation is shown by two factors here.

First of all, between the TRO and the final decree, the government actually obtained more water for the Indians than had been prescribed in the TRO.

They increased the amount that the Indians were going to get.

And secondly, in the Walker River case, Walker River Reservation having been established by the same documents... the same Indians, as a matter of fact, were involved... there was no project, no competing project, and the government still did not seek a fishery right in the Walker River case.

So, obviously, it was not acting because of any conflict in our case.

Mr. Kneedler: Mr. Prettyman, just to be sure... I want to be sure I understand.

You say the government actually got more water for the Indians.

That is for the reservation rights--

Mr. Prettyman: Yes, sir.

Mr. Kneedler: --not for the fishery rights.

Mr. Prettyman: That's correct.

No discrete fishery right was sought in Orr Ditch.

Mr. Kneedler: And you challenge the District Court's findings that the tribe's fishery right was not actually litigated in Orr Ditch?

Mr. Prettyman: Not at all.

We concede that a discrete fishery right was not sought as part of the decree in Orr Ditch.

Now, the reason I use the word "discrete" is that the United States sought a full Winters right for the reservation, but it was seeking it primarily for irrigation, which it perceived to be the primary purpose of the reservation.

So, it also... domestic water and a small amount of water for fishery undoubtedly was thought about, but you have to understand, Mr. Justice Blackmun, that unlike today, where the government is seeking a tremendous amount of water to maintain the level of the lake, back in Orr Ditch, when they were thinking about a fishery right, they were thinking about a very small amount of water simply to allow the fish to get upstream to spawn.

Mr. Kneedler: Of course, the lake has gone down 70 feet, hasn't it?

Mr. Prettyman: Well, that is very interesting, Mr. Justice.

The lake went down rather dramatically in the forties and fifties, but it has been stabilized since.

You will find a finding by the District Court, and the Court of Appeals seems to agree, that the lake has been stabilized, and our studies show that as a matter of fact, it has been stabilized since 1960, and on top of that, we have $32 million spent by the government to add to the fishery, and of course the tribe also gained $8 million in the... before the Indians Claim Commission because of their lost right.

Mr. Prettyman: --Well, the Indians Claim Commission decision is a rather interesting one, because the United States and the Indians entered into a kind of a deal where they said, well, since no fishery right could be extinguished, this could not be for the extinguishment of the fishery right.

On the other hand, it--

Mr. Kneedler: Well, it said... yes, it said it didn't distinguish the water right for a fishery, and it was for what they had lost in the past.

Mr. Prettyman: --That's correct, and it was for a reserved right lost in the past, so the only reserved right that I know that they supposedly lost was for fisheries, so I am not sure that we can say that that was not for a lost fishery right.

I would like to address myself briefly to adversity under the pleading.

We claim, of course, that you do not need it in an all-inclusive water rights litigation.

Every claimant is adverse to every other claimant by virtue of the nature of a quiet title adjudication.

However, in this case, we have something in addition.

If the Court will address itself to the appendix that we have filed with our reply brief, we summarize the parties in the TRO and in the final decree, and what you will find is that while the United States is listed as a plaintiff, the United States is also listed as a defendant, and under the defendant United States in brackets is listed what, the Newland Project and the reservation.

So, the court and the parties which agreed to the stipulated final decree were obviously interested in showing that the rights of the Newlands Project and of the reservation were indeed being adjudicated inter se, and it was putting everybody on notice that that was what was happening, and that is the only purpose of adversity under the pleadings, to give an opportunity to litigate, and to put everyone on notice that rights are being adjudicated inter se.

There was not only an opportunity to litigate here, but there was full litigation.

Mr. Kneedler: Did the tribe here sign it?

Mr. Prettyman: The tribe sign what?

Mr. Kneedler: Did the tribe here sign that decree?

Mr. Prettyman: You mean the Orr Ditch decree?

Mr. Kneedler: Yes.

Mr. Prettyman: No, sir.

They were represented by the United States.

Mr. Kneedler: But they didn't sign it, did they?

Mr. Prettyman: That is correct.

They were fully represented by the United States.

I would like to close and save the remainder of my time for rebuttal with just one point.

I would like to ask this Court a very simple, practical question.

Would hundreds of Orr Ditch defendants have worked for some 31 years in this case, litigated, and then consented to a final decree, would the Newlands Project ever have been built, would the District Court have signed that decree, would western Nevada, as a matter of fact, been built on the basis of that final decree if they had known at the time that there was outstanding some secret, unresolved claim for four-fifths of the water of this river which could be litigated 20 years hence, 40 years hence, 100 years hence, and which could totally destroy the Newlands Project?

Mr. Kneedler: How much water is the government seeking?

Mr. Prettyman: The government is seeking, Your Honor, approximately... between 375,000 and 400,000 acre feet of water.

Mr. Kneedler: A year?

Mr. Prettyman: Yes.

It would be on the average, obviously, Your Honor.

But what that would do would be to take at least half the water that is now going to Newlands and divert it, and of course they would have an 1859 priority for the entire 400,000.

There are only 500,000 acre feet in the entire river.

Thank you, Your Honor.

Chief Justice Burger: Mr. Girard.

ORAL ARGUMENT OF FREDERICK G. GIRARD, ESQ., ON BEHALF OF THE TRUCKEE-CARSON IRRIGATION DISTRICT

Mr. Girard: Mr. Chief Justice, and may it please the Court, the government contends in this case that it owns the project water rights.

It contends that the Orr Ditch degree permits it to change the manner and place and purpose of use of its water rights to non-project purposes or uses.

Basically, the government's contention is that it can allocate as it chooses the Newlands Project water rights to Pyramid Lake or presumably, if that argument is valid, to any federal purpose that it desires, including a possible MX missile site.

In our opinion, the government's contention is simplistic and wrong.

Orr Ditch in the decree did not decide the ownership of the water rights as between the project owners and the United States.

In fact, there is a specific caveat in the degree which states that.

This Court has held in Ickes versus Fox in 1937 that project water rights identical to these water rights are appropriated for the benefit of the farmers, not the United States, and that the project farmers own the water rights, not the government, and that the government's interest is only as a lienholder to secure the repayment costs of the project.

Mr. Kneedler: Did the government quantify the Newlands water right they were claiming in terms of what acreage they planned to water?

Mr. Girard: Yes, the degree provides, Justice White, for the allocation of water to 232,000 of acres, or gives the government the right to divert water for 232,000 acres.

Mr. Kneedler: Was that land all under private ownership then, or did the United States own it?

Mr. Girard: Both.

Some of it was in private ownership.

Some of it was owned by the United States.

Mr. Kneedler: But water was allocated for all of it, and all of it, I take it, has later become privately owned.

Mr. Girard: That is correct.

Purchased from the government.

In other words, at the time the action was filed, they were just initiating the construction of the project.

The Haunton Dam, which is the principal feature, was not constructed until 1915.

Mr. Kneedler: Were any contracts entered into for the delivery of water before the final decree?

Mr. Girard: Yes, certainly--

Mr. Kneedler: Long before.

Mr. Girard: --Certainly I would say the majority.

Mr. Kneedler: When was the Newlands finished?

Mr. Girard: The physical project was finished about in 1919, I would guess, Judge.

There may have been--

Mr. Kneedler: And when was water first delivered to them.

Mr. Girard: --Water was first delivered... well, the first delivery of water was 1908.

Over the whole project, probably about that period of time.

Mr. Kneedler: Well, I suppose, then, they were delivered under contract with private owners?

Mr. Girard: Right.

Mr. Kneedler: Or really, was it with a contract with TCID, or--

Mr. Girard: No, TCID was not in existence until 1926.

The government--

Mr. Kneedler: --Yes.

Well, who entered into contracts with the private water users?

Mr. Girard: --The United States.

The United States entered into contracts.

Mr. Kneedler: And what did TCID have to do with it?

Mr. Girard: TCID became the operator of the project in 1926.

Mr. Kneedler: For the United States?

Mr. Girard: For the United States, under a contract which--

Mr. Kneedler: And bound, was it, to observe the contracts the United States had entered into?

Mr. Girard: --Yes, and incidentally, TCID itself entered into some contracts with some of the landowners who had purchased their water rights after 1926.

Mr. Kneedler: Right.

Mr. Girard: And TCID itself in the Orr Ditch decree was given the right to divert the water allocated to the United States, and the decree was allocated to TCID to divert in the Truckee River agreement, which was a part of the decree.

Mr. Kneedler: So was all the water generated by Newlands covered by contract with private owners?

Mr. Girard: There are contract water rights on the Newlands project covering 73,002 acres, not 232,000 acres.

There is nowhere near enough water to irrigate 232,000 acres.

Mr. Kneedler: So that is all the water there is available, I take it.

Mr. Girard: That's correct, from both rivers, the Carson and the Truckee.

Mr. Kneedler: If you divide up the Truckee and the Carson between the... the Orr Ditch defendants, the Newlands water contractees, and the reservation, you have used all the water.

Is that it?

Mr. Girard: That's correct, except for years where you, you know, where you have like a million acres flowing down the river.

Mr. Kneedler: Yes.

Mr. Girard: Which just goes to Pyramid Lake, but in a normal year, that's correct, Justice White.

Now--

Mr. Kneedler: Mr. Girard, I read Ickes against Fox as turning at least in part on the nature of the Washington system for water rights.

Does Nevada have a system substantially similar to Washington's in that case?

Mr. Girard: --Nevada has a system appropriation in nature, and you file an appropriation, you acquire a water right by a permit.

I would think it is relatively simple.

Now, in addition to Ickes versus Fox, these project water rights in this very case on the Newlands Project, the ownership of them have been litigated in a Federal District Court case, U.S. versus Alpine Land and Reservoir Company, which was affirmed on appeal recently, and insofar as the appeal is concerned, the government did not challenge the ownership of the District Court's finding as to the ownership.

The District Court in that case specifically held that these Newlands Project water rights were owned by the project farmers, not the United States.

On appeal in the briefs the government did not challenge that.

Now, our position is very simple.

Mr. Kneedler: You think then the United States has simply in effect or actually sold water to these private owners.

Mr. Girard: They have sold--

Mr. Kneedler: They sold water rights to them.

Mr. Girard: --Sold them a water right, and it is designated as such in the conveyances.

Mr. Kneedler: And so they are owned.

The... own it?

Mr. Girard: The water right... that's correct.

Mr. Kneedler: And you say the effect of this suit or this judgment is to set aside those conveyances to some extent, anyway?

Mr. Girard: The plain fact of the matter is, this suit has prevailed.

They will not get the water that was sold to them.

They will get less water by about 50 percent than they purchased.

Mr. Kneedler: I don't know whether they really purchased it.

Who is paying back the cost of the project?

Mr. Girard: In this case the project users.

And incidentally--

Mr. Kneedler: Have they ever paid it off?

Mr. Girard: --Ninety-five percent of the purchase of the land and the water rights have been paid off today, since this project.

This project was the first reclamation project constructed.

Now, there have been additions that have been going on regularly to the project.

From the original cost of these lands and water rights, 95 percent of them have been paid off by the project farmers.

Again, and these are relatively small project farmers.

I think on this district the average farm is 60 acres, which is a relatively small farm.

Now, I would like to also discuss the United States' statement in light of the Indian Claims Commission, where it contends in its brief or acknowledge that it breached its duty to the tribe.

We don't agree.

We don't think that the duty was breached.

We think the attorneys in Orr Ditch did a capable job under the circumstances, but I would like to at least state that the United States' admission would be commendable if it were willing to assume responsibility for its breach.

Its position is that we breached our duty, but someone else should suffer the detriments, the project farmers.

In fact, its position is even less altruistic.

In the Indian Claims Commission proceeding, and those are in evidence in this case, the ruling of the Indian Claims Commission proceeding, the initial ruling provided that the tribe could recover its damages resulting from the loss of its water rights in Orr Ditch if the tribe could establish that the loss was attributable to the United States' breach of fiduciary duty in representing the Indians in the Orr Ditch case.

The case was then set for trial.

It was then settled for $8 million.

Then the parties to the settlement, the United States and the tribe, characterized their settlement as not covering the loss of the tribe's fishery right while at the same time agreeing that the $8 million precluded the tribe from seeking additional compensation from the United States for the loss of that fishery right if the end result of this case establishes that the fishery right is barred.

So, bluntly stated, the bottom line in this case is that the tribe received $8 million, it knowingly... and that $8 million was not for the loss of the fishery right in the future... it knowingly waived its right to go against the United States for compensation for that loss, and in addition, as found by the trial court in this case, in finding of fact 30, the fishery has been restored at Pyramid Lake by the expenditure of some $32 million for fish hatcheries and things along that line.

So, the bottom line, at least in our view in this case, is that everyone has relied on the finality of the Orr Ditch decree.

The decree was entered about 40 years ago.

The temporary restraining order which was entered by the court was entered almost 60 years ago.

The decree was a stipulated decree in which TCID itself was a party, signed it, its representatives, along with the United States.

The Orr Ditch decree, that decree has probably influenced in a major way the development of Northern Nevada, certainly Churchill County, which is where the Newlands Project is.

The parties have relied on it, the Orr Ditch defendants.

Subsequent appropriators people who came in later and acquired up water rights after that decree, have relied on it.

That decree has determined whether project water rights are available, and certainly no one more than the Newlands Project farmers have relied on it.

They came in--

Mr. Kneedler: Mr. Girard, why isn't TCID bound by whatever knowledge the U.S. government had in connection with the case?

Isn't TCID basically in privy with the United States in legal terms in this case?

Mr. Girard: --No, I... TCID came into the picture, was not in existence until 1926.

It came in and operated.

I am making these arguments more for the project farmers than TCID.

I don't claim that TCID has the water rights.

Mr. Kneedler: All right.

Mr. Girard: TCID was designated by the trial court as a class representative of the project farmers, and when I make that statement, I really mean it as far as the project farmers, not the entity.

They own the water right, not TCID.

Mr. Kneedler: But you have also some contract obligations to them.

Mr. Girard: Yes, and we fully perform them.

In this case, finality was intended by everybody, and the project farmers purchased their water rights, they leveled their land, they built their crops, they relied on the decree, and we feel that this is the type of a case where the decree should be enforced.

Thank you, Judge.

Chief Justice Burger: Mr. Pelcyger.

ORAL ARGUMENT OF ROBERT S. PELCYGER, ESQ., ON BEHALF OF THE PYRAMID LAKE PAIUTE TRIBE OF INDIANS

Mr. Pelcyger: Mr. Chief Justice, and may it please the Court, the Pyramid Lake Reservation was established in 1859 for the Pyramid Lake Paiute Tribe of Indians, whose name for themselves is Cui-ui Dicato, cui-ui eaters.

Contemporaneous documents show that the government's intent was to include Pyramid Lake and its "large fisheries" in the reservation, and that such a reservation would have the advantage of being the Paiute's home from choice.

Both lower courts expressly found that one of the reservation's purposes was to provide Indians with access to their historic fisheries.

Mr. Kneedler: That was their historic... that was their ancestral country?

Mr. Pelcyger: Yes, sir, it was their historic home.

It was... It had the advantage of being their home from choice.

They were the Cui-ui Decato, where the cui-ui are found no place else in the world except at Pyramid Lake.

Water from the Truckee River was and continues to be necessary to fulfill this purpose in two respects, to maintain the level of the lake and for sufficient water in the river to sustain natural reproduction of the fish.

Mr. Kneedler: Counsel, I am curious about one thing which is totally irrelevant.

Is the lake freshwater?

Mr. Pelcyger: The lake... the salinity level of the lake is 5,500 parts per million, which compares to the ocean, for example, of 35,000 parts per million of total dissolved solids, so it is about one-seventh as... less salty than the ocean, but compared to the river, the river is only, say, 250 parts per million or 500 parts per million, so it is much saltier than the ocean, and the fish--

Mr. Kneedler: There is no outlet to the lake at all?

Mr. Pelcyger: --There is no outlet, but the fish need the fresh water to spawn in.

They live most of their lives in the lake, but they ascend the river to spawn.

Mr. Kneedler: Can they get up now?

Mr. Pelcyger: They can get up now.

Congress authorized and the Interior Department built a fishway in 1976.

Mr. Kneedler: And are they using it?

Mr. Pelcyger: Yes, they are, and last year there were 15,000 fish that ascended that fishway to spawn.

Mr. Kneedler: And returned?

Mr. Pelcyger: And returned.

Yes, sir.

Mr. Kneedler: Are the cutthroat trout gone completely, or have they been--

Mr. Pelcyger: No, there is an interesting biological question that biologists like to debate about.

Spawn from the... The Lahontan cutthroat trout, first let me say, are being restocked in the lake through hatcheries.

There is no real natural reproduction of trout because they can't get above Derby Dam to spawn.

The cui-ui are naturally reproducing.

The trout are not.

But the trout through two tribal hatcheries, a federal hatchery, are being... are being stocked in the lake, and there is a decent sportsmen's fishery there which brings in most of the money that the tribe exists on.

There's an obscure biologists' question that they like to debate about whether the original... the trout were destroyed in 1940.

They ceased to exist in the lake.

But--

Mr. Kneedler: --Because they couldn't get above the Derby Dam?

Mr. Pelcyger: --No, because they couldn't get out of the lake--

Mr. Kneedler: I see.

Oh, yes, that's right.

Mr. Pelcyger: --The obscure question is whether the eggs that were taken from the Pyramid Lake, Lahontan cutthroat trout, and were deposited all over the western United States prior to 1940, whether that gene pool still exists in these other places and are now being restored to the lake by getting eggs from those fish.

And in fact there was an article in Sports Illustrated about three or four years ago where a biologist claimed that the original trout was relocated in a small stream in Utah.

But in any event, the species itself exists and exists in Pyramid Lake today.

Let me say also there was nothing whatsoever in the record in this case to suggest that the government did not assert a water right for fishery purposes in the Orr Ditch case because the fishery was not deemed to be a primary purpose of the reservation.

The federal court in the sturgeon case in 1879, which was a trespass case brought by the United States to prosecute non-Indian fishermen at Pyramid Lake specifically held that the principal purpose of the lake was the fishery, and without the fishery there was nothing.

And Congress in 1956, when it enacted legislation to restore the Pyramid Lake fishery, specifically said the fishery at Pyramid Lake was once world famous.

The trout there got to be 41 pounds at one point.

The world record for the species was caught at Pyramid Lake.

And that restoration of the Pyramid Lake fishery is deemed, to its full potential value, is deemed to be of national interest and importance.

Now, of course, the trout is--

Mr. Kneedler: What fish were the Indians selling to the Army, or to the white settlers?

Mr. Pelcyger: --The trout.

The white people never developed a taste for cui-ui.

Mr. Kneedler: All right.

Mr. Pelcyger: The trout is now an endangered species... I'm sorry, the trout is now a threatened species.

The cui-ui is endangered.

The cui-ui, in fact, is the only remaining pure species left in its genis, and so the species is in jeopardy of extension, but the cui-ui--

Mr. Kneedler: Well, is that information any more reliable than information we got that the snake doddle was about to go?

Mr. Pelcyger: --I can't speak to that, Justice Marshall.

I don't know about that information.

The Orr Ditch litigation was a travesty.

The judge who entered the decree was formerly a lawyer for the defendants in the case who argued against the existence of a water right for the fishery.

The lawyer who was representing the government and through the government the Indians when the final decree was entered had formerly been the lawyer for the Truckee-Carson Irrigation District and for a group of water users on the project.

The United States--

Mr. Kneedler: Do you have any response to the assertion by Nevada that there was formal adversity in the 1926 TRO and in the final decree, as they pointed out in the reply brief?

Mr. Pelcyger: --Yes, Your Honor.

There couldn't be any formal adversity because both the Newlands Project and the United States were represented by the same party, the United States.

The United States couldn't be adverse to itself.

The same attorneys were representing the Indians' interests and the interests of the Newlands Project.

Adversity is incomprehensible in those circumstances.

What Nevada pointed out in its reply brief is that the caption of the case was in the nature of an index, and the caption of the case told you where to go to find out the rights of the Newlands Project, the rights of the Indians, but it didn't and it couldn't have conceivably adjudicated those rights.

In fact, it wouldn't even have been a justiciable issue, because the United States couldn't litigate against itself.

Mr. Kneedler: Nevada also argues that you don't need adversity, as Judge Schroeder felt in her dissent, in a water litigation, that everyone in the case is bound, whether or not they were adverse to one another.

Mr. Pelcyger: But you need justiciability.

You certainly need justiciability.

And how--

Mr. Kneedler: Is justiciability a requirement of... kind of a federal requirement in water rights?

Mr. Pelcyger: --Well, justiciability is a constitutional requirement.

Mr. Kneedler: It's an... yes.

Mr. Pelcyger: And the issue here, the reason that justiciability is important relates to the identity of claims issue of res judicata, because there is no question that the fishery water right was not actually litigated in Orr Ditch.

The only question that this Court has to face on--

Mr. Kneedler: Why do you say a fishery water right?

I mean, the Indians' claim of water right under the Winters doctrine was litigated, but the fact that the government might have left out one argument for getting more water doesn't mean the specific right wasn't--

Mr. Pelcyger: --It's not just an argument.

There was no evidence whatsoever that the fishery needed water.

There was no--

Mr. Kneedler: --Okay, so the government forgot to put in some evidence.

Mr. Pelcyger: --Well, I don't think it's that.

The government made a conscious, deliberate decision, and the record shows, and the District Court found that it made that decision because the fishery right conflicted with the right for the Newlands Project.

There wasn't enough water for both purposes.

Mr. Kneedler: There you are.

There you are.

Now, what about adversity at the time of the final decree?

Who had an interest in the Newlands water right at the time of the final decree?

Mr. Pelcyger: Who had an interest in the Newlands water right?

Mr. Kneedler: Yes.

Mr. Pelcyger: The United States and the project farmers, and TCID.

Mr. Kneedler: The project farmers did, and you wouldn't... would you say that they were adverse to the... any more water for the Indians?

Mr. Pelcyger: Were they adverse to it?

Did they oppose it?

Mr. Kneedler: Did they have adverse interests in the water right?

Mr. Pelcyger: There is no question but that there was a conflict.

There was competition between those two interests.

But there was no adversity in the legal sense within the confines of the Orr Ditch case because the--

Mr. Kneedler: Well, by the time of the final decree, it wasn't just the United States that was asking for a water right, or whose water right was being adjudged.

You aren't really suggesting what the United States argued, that they could take... they could today take this Newlands water right and give it to a national forest?

Mr. Pelcyger: --I am not suggesting that.

I am not sure that the... I don't think the United States is suggesting that.

Mr. Kneedler: Or that they could reallocate any way they wanted to the Newlands water right just because it was adjudicated to them in 1943 or--

Mr. Pelcyger: No, I think the point of the United States is that... and I will let them speak for themselves... that--

Mr. Kneedler: --Yes, well, I have read their brief.

Mr. Pelcyger: --Okay.

Is that the right of the projects is derivative through... the project users is derivative by contract, and if that contract is breached, their remedy is for breach of contract, but that there is nothing in the decree that... this is a res judicata case... that there is nothing in the decree that prevents the government from doing what it does.

I would like for a second, if I could, to get back to Justice Rehnquist's question about justiciability.

This Court must find, to uphold res judicata, that the fishery water right should and could have been litigated in the Orr Ditch case.

There is no way that that finding can be made if the issue would not even have been justiciable.

Mr. Kneedler: Well, you insist that the fishery water right is some sort of a separate kind of right from the Indian claim under the Winters doctrine generally.

I view it just as insufficient evidence as to one possible use that the Indians--

Mr. Pelcyger: It was clearly distinguished by the government.

The government sought an irrigation right for the tribe, and it sought that right precisely because there was a determination by the government that there wouldn't be a conflict between the irrigation right and the fishery right, and that's why it didn't assert the fishery right.

So, whether... I don't think this case presents whether in some other circumstance a Winters doctrine right for fishery and irrigation is part of the same right or is different.

The crucial factor here is that the water right for the Newlands Project was consistent with the Indians' irrigation right because it was so small, but was inconsistent and deemed to be inconsistent and in conflict with the fishery water right.

That's why the fishery water right was not asserted.

Mr. Kneedler: --But aren't all water rights appurtenant to land?

I mean, it is just an amount of water that attaches to certain land.

That's all.

Mr. Pelcyger: Yes, but the land is different.

The irrigable land on the Indian reservation is 6,000 acres of irrigable land to which the irrigation water right is appurtenant.

The fishery water right is appurtenant to Pyramid Lake and to the Truckee River, which is within the reservation.

There's different land involved.

It's as if there were two different parcels of land involved in a quiet title action.

Now, the conflict of interest, which is the critical point from the tribes' standpoint in this case, and which was expressly found to exist, the District Court found not only that the conflict exists; but that the conflict was the reason that the fishery water right was not asserted.

Mr. Kneedler: Now, that's what I wanted... you mentioned that earlier.

Where is that finding?

What finding is that?

Mr. Pelcyger: That finding is... Let me quote it to you.

On Page 185-A of the Petitioner's appendix.

Mr. Kneedler: Finding 9?

Is that the one?

Mr. Pelcyger: Excuse me?

Mr. Kneedler: Finding 9?

Is that the one?

Mr. Pelcyger: Yes.

It was the intention of the plaintiff, that is, the United States, by and through its attorneys, the Bureau of Indian Affairs, and the Bureau of Reclamation, to assert as large a water right as possible for the Indian reservation and to do everything possible to protect the fish for the benefit of the Indians and the white populations

"insofar as it was consistent with the larger interests involved in the proposition having to do with the reclamation of thousands of acres of arid and now useless land for the benefit of the country as a whole. "

So, this finding is a smoking gun.

It shows not only the existence of the conflict, but it shows that it adversely affected the performance of the government's lawyers, and the tribe's primary submission is that because of this government's conflict, the tribe was denied a full and fair opportunity to be heard.

Mr. Kneedler: The finding doesn't quite say that they would have asked for more water if they weren't acting in both capacities, though.

Or do you think that is the correct reading of it?

Mr. Pelcyger: Well, I think you can safely say by analogy to the criminal cases, to Cuyler against Sullivan and Wood against Georgia, that it certainly shows that the conflict influenced the conduct of the litigation and adversely affected it from the tribe's standpoint.

Now, I think it is impossible for any court to make a finding about what would have happened if this wasn't there, but the finding says that there was actual prejudice, and I don't see for due process purposes how you could have anything more than that.

Mr. Kneedler: Well, is there any evidence other than... taken apart from the finding, what is the evidence that the government would have sought more water on behalf of the Indians had they not represented the other group?

Mr. Pelcyger: Because every time the issue was brought up, and there were specific recommendations made to assert the water right, the reason that it was not asserted had nothing to do with it wasn't meritorious, it wasn't a primary purpose of the reservation.

The reason it was not asserted was because of the conflict with the Newlands Project.

There is a letter in the record in the joint appendix, at Page 444, for example, where the Secretary of the Interior says, inasmuch as there is at nearly all times only enough water for irrigation purposes, it is believed that it would be most difficult, if not impossible, to obtain a portion for fish life.

And the government attorneys, the Justice Department attorneys specifically said the same thing.

They said, a Congressman wrote to the Attorney General and said, what are you doing about fish life in the Truckee River?

And the Justice Department Attorney answered by saying that the fishery issue was completely outside the scope of the Orr Ditch case.

It was never in the case.

And then he went on to say, "Inasmuch as the"... and this supports the justiciability argument, Justice Rehnquist,

"Inasmuch as the government has control of the Derby Dam, I have always thought that the Reclamation Service and the Indian Service, both bureaus of the Department of the Interior, could settle the matter between them as to providing the proper fishways and comparatively small amount of water which may be needed to enable the fish to pass up the fishways. "

So, the Justice Department knew that it wasn't an issue that could and should have been litigated.

The Justice Department knew that it had to be settled administratively and couldn't be litigated in a case in which the Justice Department was representing both of those bureaus through the Secretary of the Interior.

Thank you.

My time is up.

Chief Justice Burger: Mr. Kneedler, you may proceed when you are ready.

ORAL ARGUMENT OF EDWIN S. KNEEDLER, ESQ., ON BEHALF OF THE UNITED STATES

Mr. Kneedler: Thank you, Mr. Chief Justice, and may it please the Court, I would like to make something clear at the outset of my argument.

The government is not asserting that it owns the water rights in this case and that it has a right to reallocate that water willy-nilly to any use it might desire, to a wildlife refuge, to the MX missile.

We are not asserting any such right.

The narrow question involved at this interlocutory stage of the case is whether the United States and the tribe are absolutely barred by the doctrine of res judicata, from seeking to establish a prior reserved water right for the fishery on their reservation.

This case does not concern what rights the individual Newlands Project landowners might have under the contracts that they entered into with the United States.

Mr. Kneedler: Suppose, Mr. Kneedler, they had been absolute parties, named parties by the... in the case by the time of the final decree by virtue of their... by virtue of their contracts with the United States.

Mr. Kneedler: I think that might well have made a difference, Mr. Justice White.

Mr. Kneedler: Might well, or would?

Mr. Kneedler: Well, it is certainly a distinguishing factor.

I think on the question of res judicata it might well be dispositive.

Mr. Kneedler: I would think it would, but you think this case is different just because the United States was sitting there with a bunch of contracts with landowners, and they got a final decree in the United States' favor for the Newlands Project, knowing all the time that they had contracted away all of that water that was available, and that... don't you think that the United States at least ought to be subject to specific performance of their contracts rather than... rather than take the water away and let the... and have to pay for it?

Mr. Kneedler: There are several responses.

First, the United States is ordinarily not subject to specific performance for its contracts.

What those contracts would have... Let me go back.

The issue in this case essentially at this point, where the tribe now is a party, and the Newlands Project water users now are parties, is whether the claims asserted on behalf of each of them are barred by the doctrine of res judicata.

Neither the tribe nor the individual water users was a party to the prior decree.

But beyond that, the water rights that each asserts now was not adjudicated in the prior decree.

We have the District Court's finding that the fishery right which the tribe and the United States on its behalf were asserting was not involved.

But getting to Mr. Justice White's point, the rights of the individual project water users were not adjudicated in Orr Ditch.

Counsel for TCID concedes that--

Mr. Kneedler: Well, the amount of water was adjudicated to Newlands.

Mr. Kneedler: --To the United States, and--

Mr. Kneedler: Yes.

Yes.

Mr. Kneedler: --but the decree... the decree went--

Mr. Kneedler: And the United States had already contracted it all away.

Mr. Kneedler: --But the decree itself went no further.

The decree did not adjudicate the rights that were conveyed by the contracts.

The decree went only so far as awarding a diversion right to the United States.

Mr. Kneedler: But Ickes against Fox surely says that the government doesn't get beneficial title to the water that's adjudicated in that way.

Mr. Kneedler: Yes, but the right that the project water users are asserting is not a right that was adjudicated, was recognized by the decree in Orr Ditch.

It was separately conveyed by the United States when it entered into the contracts with the individual water users.

Mr. Kneedler: Then that had already been done.

Mr. Kneedler: The contracts were entered into over a period of time, by the time of the final decree.

Mr. Kneedler: Well, it had all been done by the time of the final decree.

Mr. Kneedler: Virtually all.

I don't know for certain, but virtually all.

Mr. Kneedler: Well, don't you think the United States was just, in a way, not only a representative of the tribe, but a representative of the landowners in the final decree?

They had already contracted all their rights away.

Mr. Kneedler: Well, in terms of the text of the final decree, in fact, the answer is no.

The text of the decree--

Mr. Kneedler: But what about for the purposes of res judicata?

Mr. Kneedler: --Well, for... I think that's quite important for the purposes of res judicata, because what we are talking about under res judicata is looking at the confines of the decree and what effect should be given to the decree.

The decree states, and in fact the District Court in this very case found that the United States appeared in a representative capacity on behalf of the Indians, but it did not say that the United States appeared in a representative fiduciary capacity on behalf of the individual project water users.

It said, in fact, that the United States... the District Court in this case specifically found the United States sued in its own capacity, and the water right that was adjudicated to it was made under the Orr Ditch decree, now, specifically, and I quote,

"under such control, disposal, and regulation as the plaintiff may make or desire. "

the plaintiff being the United States.

Mr. Kneedler: Mr. Kneedler, is it conceded that many of these landowners actually paid the United States for the water rights they now enjoy?

Mr. Kneedler: Yes.

Mr. Kneedler: And if the government, the United States should ultimately prevail in this case, would it be the obligation of the United States government to condemn those rights and pay compensation.

Mr. Kneedler: I... at this point, Justice Powell, I am not at liberty to concede that the United States would be liable for damages.

Mr. Kneedler: Isn't it--

Mr. Kneedler: Certainly there would be a cause of action for either breach of contract or for taking.

There would be a remedy in the Court of Claims.

The question would be whether the contracts that conveyed these water rights in fact were breached in a sense that the United States should be liable for.

Mr. Kneedler: --Isn't it your position that the United States as a fiduciary defaulted in its duty?

Mr. Kneedler: As a fiduciary to the tribe.

Mr. Kneedler: Yes.

Mr. Kneedler: Yes, it is quite firmly our--

Mr. Kneedler: And the United States now wants to default in its duty to the landowners?

Mr. Kneedler: --Justice Powell, I don't suggest that the current circumstances are easy ones.

The United States has not lightly undertaken this lawsuit.

And the United States filed an original action in this Court because it perceived the substantial breach.

So I do not want to suggest that this is something that the United States has undertaken lightly.

Mr. Kneedler: Mr. Kneedler, after the $8 million settlement, may the United States still be sued, as you suggest?

Didn't that settlement foreclose any further action?

Mr. Kneedler: It forecloses the tribe.

I understood Justice Powell to be asking whether the individual project, Newlands Project water users--

Mr. Kneedler: The case is very, very worrisome, because any way it is decided, someone will lose.

Someone will lose seriously.

Someone always loses a lawsuit, but this case is very perplexing because of the--

Mr. Kneedler: --But when we look to the circumstances of the case, Justice Powell, what we have is a fishery water right that... a use to which the water of the Truckee was put from time immemorial by the Indians involved in this suit, a use to which it was being put at the time this very case was brought, and the District Court's findings in this case concur with what Mr. Pelcyger said.

The District Court's findings establish in our view, unfortunately, that the executive officials within the Interior Department resolved the conflict of purposes with which they were confronted against the reservation and in favor of the Newlands Project, and in addition to the particular finding that Mr. Pelcyger relied on, I would also like to refer the Court to Page 165-A of Nevada's appendix to Nevada's petition, where the Court says,

"The United States was squarely presented. "

with a conflict of purposes that was "apparent and foreseeable", deriving from the need to satisfy water rights for the reservation and for the project out of a limited quantity of water.

This case is thus the opposite end of the spectrum from what the Court had in Arizona versus California.

Mr. Kneedler: --Do you think that conflict of interest, however, wouldn't prevent res judicata from attaching if the Newlands landowners had been parties at the time of the final decree?

Mr. Kneedler: Well, I think that would be a different case, because the--

Mr. Kneedler: I thought you said a while ago it would be dispositive of the res judicata question.

Mr. Kneedler: --I said it might well be dispositive.

I think there might be a question as to whether the TCID or the project water users actively participated other than being a nominal party.

Mr. Kneedler: Do you defend the opinion of the Court of Appeals?

Mr. Kneedler: Yes, the position of the United States is that there is no need to disturb the water rights of the defendants who were sued in Orr Ditch.

Mr. Kneedler: That is the judgment.

How about the opinion?

Mr. Kneedler: Yes.

Well, we think there are several factors going to the--

Mr. Kneedler: You are relying on the ground here, at least one of your grounds, that the Court of Appeals did not use, I take it.

Mr. Kneedler: --No.

What the Court of Appeals said is that the judgment in Orr Ditch should not be read to have conclusively decided all causes of action between the tribe and TCID, because of the lack of setting up those claims in an adverse sense.

What I have explained here is why the terms of the Orr Ditch decree in fact established that; that they did not adjudicate either the individual water rights that are being asserted in this case or the tribe's water rights that are asserted in this case.

We submit that when the two persons interested were not even parties, and the rights they are now asserting in the case were not even litigated in that case, that res judicata does not apply, and that was basically the reasoning of the Court of Appeals.

What the Court of Appeals did was rely--

Mr. Kneedler: One of your arguments, I take it, wholly independent of res judicata, is that the water was adjudicated to the United States, and that as long as you... and that you can take the water away from one of your contractees and give it to somebody else just as long as you are willing to pay the contractees.

Mr. Kneedler: --No, Justice White, that is not--

Mr. Kneedler: I thought that was the message of your brief.

Mr. Kneedler: --Well, there--

Mr. Kneedler: You say you can--

--I did, too.

Mr. Kneedler: --That may be--

Mr. Kneedler: You can reallocate your water any way you want to as long as you are willing to pay whoever you hurt.

Mr. Kneedler: --Well, that may be--

Mr. Kneedler: And who knows that 40 years from now you won't be coming back to rewrite history again.

Mr. Kneedler: --Well, we are not... as I said, we are not asserting the right to do this on the basis of a right to reallocate.

All we are... What... The argument--

Mr. Kneedler: You certainly... I must have misread your brief, Mr. Kneedler.

Mr. Kneedler: --Well, what... our--

Mr. Kneedler: Which is certainly possible.

Mr. Kneedler: --Well, and perhaps I didn't express myself very well there.

Let me try again.

All we are saying is that the decree went no further than to adjudicate the rights of the United States, a right of diversion in the United States--

Mr. Kneedler: Then you went on and said, we may reallocate our water right, and if the landowners have any beef, they can come and try to get paid.

That's what you said in your brief.

Mr. Kneedler: --But the reallocation point, though, we relied upon to reinforce the conclusion that the decree didn't go further, that the private defendants in the lawsuit are permitted to reallocate their water.

The decree did not forever prohibit them from diverting the water to another use.

Mr. Kneedler: I thought what I suggested was your opening argument.

Mr. Kneedler: Well, we... it may well be that the United States could go further and without any... and do--

Mr. Kneedler: As you did.

As you did.

Mr. Kneedler: --Well--

Mr. Kneedler: Well, you may be right.

Who knows?

Mr. Kneedler: --We may be, but it is not necessary to go that far in this case, because all this case involves is the question of res judicata, which depends on the decree.

I would like to address briefly whether we defend the opinion of the court below, and we do.

The court drew on the principle now set forth in Section 38 of the restatement of judgments relying on adversity under the pleadings.

Whatever one's view of whether that rule is sensible or not sensible, and the fact that the restatement has reinvoked it suggests that it is of continuing vitality, but the important point for this case is that the question of res judicata goes to the effect of the Orr Ditch decree.

What we have in the Orr Ditch decree is a specific focusing on... or in the Orr Ditch litigation, a specific focusing on the problem of a need for adversity under the pleadings.

The District Court in Orr Ditch itself took measures to assure adversity among the defendants, but did not do that among the interests represented by the plaintiffs.

Mr. Kneedler: Mr. Kneedler, is there a federal rule of res judicata that should apply in this case, or does it depend on the law of the state of Nevada?

Mr. Kneedler: We would submit that there would be a federal rule of res judicata because the rights being asserted here were federal rights.

Mr. Kneedler: How about Allen against McCurry?

There were federal rights being asserted there, too.

That was a 1983 case.

Mr. Kneedler: Well, this is a suit brought in federal court, though, so--

Mr. Kneedler: Well, so was that.

I mean, do you know of a case that says there should be a federal rule of res judicata under these circumstances?

Mr. Kneedler: --Offhand I do not, but I would think ordinarily that the... there might be a separate question of whether federal law would adopt state law, but ordinarily I would think in a federal suit brought by the United States to declare federal water rights that there would be a federal rule of res judicata.

The point I wanted to make is that the District Court in this very case as distinguished from assuring adversity on the pleadings among the defendants did not do that for the respective rights being asserted in this case to assure some way in which those rights would be met in a square conflict.

Now, I wanted to lastly address one point that Justice O'Connor asked about, whether TCID and the project water users that they represent should be charged with the actions or knowledge of the United States.

I think there is considerable force to that point that when parties take through another party to a lawsuit, to some extent they must be charged with the acts of that party, but there is more here.

Here we have TCID on behalf of the project water users affirmatively opposing the assertion of water rights by the United States, seeking to expand the water right for irrigation purposes, even, putting to one side the fishery right which TCID opposed even releasing water for two weeks in 1925 or 1926, I think it was, for the fishery.

Here we have TCID vigorously opposing the assertion of rights by the United States.

Therefore, it is not just the circumstances, but it was brought vividly to TCID's attention that the United States had conflicting obligations to the Indian interests and to the reclamation project interests.

Mr. Pelcyger said that the United States couldn't be adverse to itself.

The United States was adverse to itself, named as party, both plaintiff and defendant, and is in this very case... it is seeking runoff water for the Stillwater refuge in this case, and Stillwater is located half in and half out of the Newlands Project.

If they win in this case, there isn't going to be any runoff water for the very interests that they are seeking it for in this case.

I would simply say in regard to Mr. Kneedler's main point, if he can take this water and do with it as he pleases, one wonders why the District Court quantified the Newlands right down to the last acre foot, not only in terms of the total amount of acre feet that we've got, but 3.5 and 4.5 acre feet per acre for Newlands specifically.

Mr. Kneedler: Could you take water... Where is the dam that--

Mr. Prettyman: Derby Dam, Your Honor, is... after it leaves what we call the Meadows--

Mr. Kneedler: --Yes.

Mr. Prettyman: --which is where most of the farmers are located other than Newlands, it goes down the river.

It then splits at Derby Dam, and half of it goes off to the left, to Pyramid, and the other half goes off down to Newlands.

Stillwater is on the far side of the Newlands Project.

Mr. Kneedler: But the dam is above the split.

Mr. Prettyman: The dam is at the split.

Mr. Kneedler: Is at the split?

Mr. Prettyman: Yes, sir.

Mr. Kneedler: But you could water... you could bring water to the reservation from behind the dam?

Mr. Prettyman: Yes, you--

Mr. Kneedler: And that water that is stored is available to the... physically available.

Mr. Prettyman: --Yes.

As a matter of fact, that is one of the interesting things I wanted to point out when they talked about an alleged conflict before.

When it was originally contemplated in the 1904 Act, when they talked about... remember, there was some talk about the larger purposes of reclamation?

What was contemplated at that time under the 1904 Act was that the reservation was going to be irrigated out of Newlands.

They thought that there was going to be a canal built from Newlands so that the reservation was going to get... was going to be irrigated.

That's what they meant by the larger interest of reclamation.

They were including Newlands in that.

They weren't just talking about Newlands.

They were talking about the reservation.

Unless there are questions, Your Honor, I have nothing further.

Chief Justice Burger: Thank you, gentlemen.

The case is submitted.

Mr. Kneedler: The Honorable Court is now adjourned until Monday next at 10 a.m..